Heartland Express acquires Millis Transfer for US$150m
NASDAQ-LISTED Heartland Express has used its debt-free balance sheet and ability to generate strong cash flows to acquire dry van truckload (TL) carrier Millis Transfer for approximately US$150 million
NASDAQ-LISTED Heartland Express has used its debt-free balance sheet and ability to generate strong cash flows to acquire dry van truckload (TL) carrier Millis Transfer for approximately US$150 million.
The potential for the acquisition was evident when the company reported second quarter 2019 earnings showing its largest cash position since the third quarter of 2012 at $205.6 million with no debt on the balance sheet, reports New York's FreighWaves.
Heartland had only $80 to $100 million in net capital expenditures on the agenda for 2019 and many were left wondering what the company's next move might be.
There are really only three choices for spending cash for a company generating a significant amount of it. Dividends, share repurchases or acquisitions were the only viable options for the carrier to re-deploy its cash balance. Heartland chose acquisitions - a road it has been down before - seven times since 1987.
Millis Transfer is a dry van asset-based TL carrier headquartered in Black River Falls, Wisconsin. The third-generation family-owned company, and affiliated entities, have 11 terminal locations in Georgia, Illinois, New York, North Carolina, Ohio, Texas, Virginia and Wisconsin primarily serving the Midwest, eastern United States and Texas. Millis has approximately 840 drivers and 850 power units according to the Federal Motor Carrier Safety Administration.
Millis boasts a sub-50 per cent driver turnover rate and has a fully compliant electronic logging device (ELD) fleet. Millis sources potential drivers through the Millis Training Institute, which has five driver training locations throughout the country.
The roughly $150 million transaction, which includes assumed debt, will be funded with cash and $750,000 of HTLD stock.
All of Heartland's acquisitions have some commonality. They fill a geographical need; the acquired carrier is driver-focused and has a strong safety record; and the deals are expected to be immediately accretive to earnings.
'We are very pleased to welcome everyone at Millis to Heartland Express. We are impressed with the high quality of the driving professionals and the organization's safety profile. In addition, the regional coverage, equipment, conservative and disciplined management style, and culture are all very compatible with our approach.
'The current Millis family management team has over 113 years of combined experience and will remain with the business in their current roles. We expect Millis to contribute to our ongoing success immediately, and with opportunities for further improvement, get even better over the long-term,' said Heartland Express' chairman and CEO Michael Gerdin.